The reward-to-variability ratio measures:
A)return above the risk-free rate.
B)excess return per unit of total risk.
C)total risk per unit of excess return.
D)return above the risk-free rate relative to the risk-free rate.

Question

Quizplus · Accepted Answer

The reward-to-variability ratio measures the excess return earned per unit of total risk taken, also known as the Sharpe ratio. It measures the tradeoff between risk and return, where investors would prefer a higher ratio, as it indicates higher returns for the given level of risk.

The Reward-To-Variability Ratio Measures